Kicking off 2026, this edition examines how AI demand is driving climate tech investment and refocusing capital toward scale-ready power solutions.

Happy New Year! We’re blasting into 2026 with an investing update.

Global venture and growth funding totaled more than $40 billion in 2025, an 8 percent uptick from 2024–one of several findings of note in Sightline’s new report on climate tech investment trends. Given last year’s policy headwinds, we might have expected this number to drop. But the hunger for electrons is real, and the power sector was the leading beneficiary. Driven in large part by demand growth for AI energy and data centers, the year’s second half was especially robust–the strongest two consecutive quarters for new climate capital since the boom years of 2021 and 2022.

A few top-line report highlights:

• Growing energy demand has capital pulled “toward gridtech, virtual power plants, and flexibility solutions that can deploy quickly” alongside longer-term efforts to deploy renewables, batteries, and nuclear.

• Fusion and fission, the “next battleground” for the U.S. and China, accounted for 44 percent of global energy funding, while distributed energy resources and storage totaled another 24 percent.

• Funding for U.S.-based startups jumped by 27 percent, to nearly $21 billion–more than double the figure for Europe, where investment slid backwards.

• Funders wrote bigger checks for fewer deals (down 18 percent year-over-year) and for more mature solutions by category leaders. Growth-stage funding surged by 78 percent, while early-stage investment totals dropped YoY. New entrants took a back seat to proven winners. As Sightline noted, the mantras of the day are “scale, certainty, and execution.”

• The main caveat in this mostly positive story is the question of durability. As Sightline warned, “If AI demand falters, there is no obvious replacement waiting behind it.”

• Our takeaway: Emissions reductions still matter, but speed to power and lower costs are primary.

Speed & Scale calls for $50 billion per year in venture investment to fund the leap from lab to deployment and to help unlock the breakthroughs that will save a habitable planet. We’re encouraged that climate tech investment is edging up despite those headwinds, but we still need much more funding across the capital stack to meet our bottom-line goals for decarbonization and net zero.

OKRs in the News

🚗 1.0 – Electrify Transportation

• EV Reset: In a move to restore momentum amid flagging EV demand, automakers are planning a wave of new electric vehicles for 2026, including revamped models from Chevy and Nissan and new entries from Rivian. The lineup reflects a push toward more affordable pricing and broader appeal as tax incentives fade and competition intensifies (Heatmap).

• Tesla Tumbles: Tesla’s global vehicle deliveries dropped by 9 percent in 2025, the company‘s second straight down year–enough for China‘s BYD to take its crown as the world’s top seller of electric vehicles. Tesla‘s decline reflected weaker fourth-quarter sales after U.S. tax incentives expired, with results lagging analyst expectations (The Wall Street Journal).

🐄 3.0 – Fix Food

• Scraps to Snacks: Whole Foods, in partnership with Amazon and startup Mill, is developing AI-enhanced food recycling systems to cut waste volumes up to 80 percent and meaningfully reduce greenhouse gas emissions. The new systems can turn fruit and vegetable scraps into dehydrated material for chicken feed or compost (Axios).

• Nitrogen Boost: Agronomist Mariangela Hungria’s research on nitrogen-fixing bacteria has avoided greenhouse gas emissions equivalent to 54 million cars on the road each year. By enabling farmers to grow soybeans with far less chemical fertilizer, these biological alternatives show potential to address hunger and pollution at scale (The Washington Post).

  
  

🌳 4.0 – Protect Nature

• Disaster Recap: Last year was the third costliest on record for billion-dollar weather and climate disasters, with 23 events totaling $115 billion in damages. Climate Central’s annual report shows how severe storms, flooding, and extreme heat illustrate longer-term trends. As these mega-disasters come more often, communities have less time to recover before the next one strikes (Climate Central).

🧱 5.0 – Clean Up Industry

• Wardrobes of Waste: Cheap fast-fashion clothing has fueled a massive global pollution problem, leaving up to 60 billion garments a year incinerated or discarded in places like Chile’s Atacama Desert. From production to disposal, the hyper-fast supply chain drives environmental wreckage that brands and consumers are struggling to address (Grist).

• Plastic Pushback: The EU is planning new measures to protect its plastics recycling industry after plant closures across the bloc. Officials say that cheap foreign plastics, notably those from China, have undercut recyclers and accelerated the loss of capacity (Financial Times).

Podcast Highlight🎙️

✈️  Flying generates half of all transportation emissions in Hawaii.

Globally, the aviation industry is responsible for 3.5 percent of the world’s carbon emissions. While that might seem like a small number, airplane emissions are projected to double by 2050, and clean jet fuel still comes with a green premium of more than 100 percent. 

Ryan and Anjali take a look at Hawaii’s audacious goal to zero out emissions from transportation by 2045 and dig into what the state is doing to make sure its target is more than a flight of fancy. Hawaii faces a unique challenge, with aviation accounting for nearly half the state’s emissions in the sector.

They sit down with Dan Rutherford, an aviation expert at the International Council on Clean Transportation, to discuss the solutions already in play and the ones needed to get to the goal line.

🧹 6.0 – Remove Carbon

• Big Year, One Buyer: CDR companies sold nearly 30 million tons of carbon removal in 2025—more than triple the total in 2024—but 90 percent of those credits were purchased by Microsoft. While market growth has stalled, experts point to real-world deployments, growing industry adoption, and emerging compliance markets in the EU and UK as positive signals (Heatmap News).

• Sinking Hopes: Running Tide, once a high-profile carbon removal startup backed by Microsoft and Lowercarbon Capital, collapsed in 2024 after dumping 25,000 tons of wood chips off Iceland’s coast without third-party verification or clear scientific justification. The company‘s fall underscores the urgent need for rigorous oversight in marine carbon removal (WIRED).

OKR Highlight

New York decongestant: Marking the first anniversary of New York City’s congestion pricing program, a New York Times analysis found that it’s meeting nearly all of its targets: shorter commute times, faster street traffic (for both cars and buses), fewer drivers and pedestrians injured in accidents, and more people shifting to mass transit. In turn, the city’s beleaguered transit system will reap more than half a billion dollars for infrastructure upgrades from last year’s proceeds alone.

With drivers facing a $9 charge at peak travel times, 73,000 fewer vehicles entered Manhattan’s central business district each day, or 27 million fewer for the year. The results were perhaps most dramatic for morning commutes through the bridge and tunnel chokepoints into Manhattan, where average speeds rose up to 51 percent. Quality-of-life metrics–from vehicle noise complaints to safer and less stressful bike rides–also moved in the right direction. While air quality data is inconclusive, many Times readers said the air felt cleaner. The cherry on top: Despite concerns that the pricing program would be bad for business, visits to the congestion zone were up 2.4 percent, with restaurant reservations up as well.  

🏛️ 7.0 – Win Politics And Policy

• States Step Up: Despite a turbulent 2025 marked by federal rollbacks under the Trump administration, solar and battery storage still accounted for 85 percent of new U.S. power capacity. Buoyed by strong economics and surging electricity demand, clean energy developers are now looking to states, not Washington D.C., to sustain momentum in 2026. Their aim is to deliver low-cost, reliable power for both data centers and households (Associated Press).

🏃 8.0 – Turn Movements Into Action

• Charged with Risk: China added 429 gigawatts of new power capacity in 2024—more than eight times the U.S.—and now controls 75 percent of global battery production and 90 percent of key motor magnets. Ranking this state of play as number two among Eurasia Group’s Top Risks 2026, the report issues a warning: As the U.S. retreats from renewables, China’s clean energy dominance threatens to undercut American competitiveness and energy security (Eurasia Group).

• The Innovation Imperative: Elemental Impact’s Dawn Lippert argues that environmentalism must evolve from a movement that merely protects to one that builds and innovates. She urges philanthropy, policy, and advocacy leaders to back the deployment of breakthrough technologies, the key to solving the climate crisis at speed and scale (Heatmap News).

⚡ 9.0 – Innovate!

• All Aboard the Atom: With shipping responsible for three percent of global CO₂ emissions, momentum is building to explore nuclear-powered commercial ships as a zero-emissions alternative. A new MIT-led study found that retrofitting cargo vessels with next-gen microreactors is technically and financially feasible, though regulatory and diplomatic hurdles could delay deployment until the 2030s (The Wall Street Journal).

• Future Forecasting: Nature‘s “Science in 2050” look-ahead explores the trends shaping our future, including the growing likelihood that the world will surpass 2°C of warming well before mid-century. While climate scientist Guy Brasseur warns that global warming could trigger unilateral geoengineering efforts, futures researcher Elina Hiltunen voices optimism over profitable carbon removal technologies that turn CO₂ into useful products (Nature).

• Science at Sea: Scientists in the Gulf of Maine have successfully piloted the release of sodium hydroxide to counteract ocean acidity. At scale, the technology could remove up to 15 billion tons of carbon dioxide from the world’s oceans. With further research and support, more ocean alkalinity can slow warming while protecting marine ecosystems threatened by acidification (New York Times).

💰 10.0 – Invest!

• Markets Go Net Zero: Global green bond and loan issuance hit a record $947 billion in 2025. Soaring electricity demand from AI and electrification has repositioned clean tech as a core infrastructure play. Investors are pouring capital into renewables, grid upgrades, and battery storage, with stock market gauges for renewables set for their first annual gains since 2020 (Bloomberg).

• From Sizzle to Signal: As interest rate cuts and Trump-era policy shifts offer more clarity, albeit with less federal support, climate tech investors are entering 2026 with renewed focus. Khosla Ventures and Energy Impact Partners are among those doubling down on grid tech and clean energy to meet AI-fueled demand. Others are pulling back from such areas as nuclear and alternative proteins, citing unsustainable valuations and weak fundamentals (Bloomberg).

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